By Huw Jones
LONDON (Reuters) - A global body on Wednesday proposed its first set of comprehensive rules for auditing climate-related company disclosures in an anticipated move regulators have said is crucial for giving investors information free of greenwashing.
Stricter European Union, U.S. and global rules are being introduced over coming months to replace a patchwork of voluntary private sector practices for listed companies to disclose the impact of climate change on their bottom line.
EU members and other countries will require the disclosures to be externally audited in a similar way to how financial statements are checked by outside accounting firms such as EY, KPMG, Deloitte and PwC.
The International Auditing and Assurance Standards Board (IAASB) said its first comprehensive, standalone standard for auditing sustainability disclosures would play a key role in enhancing trust and confidence in reporting.
The proposed standard, put out to public consultation, can be used for disclosures under the various regimes being rolled out to aid global consistency, the IAASB said.
"The final standard will be issued before the end of 2024," it added.
Nigel Sleigh-Johnson, director for audit and corporate reporting at the ICAEW, a London-based professional accounting body, said the proposed standards were a much-needed underpinning for high quality disclosures.
Jurei Yada, programme lead for EU sustainable finance at climate think tank E3G, said auditing can have a "multiplier effect" on the use of new disclosure rules, and accelerate the uptake of company plans on how they will transition to a net-zero economy.